Mergers and acquisitions are a common occurrence in the modern business world, and with the current economic climate, they’re usually beneficial to all parties involved. As it stands, many still associate a merger with a business failing or have a generally negative perception of how it works. However, a merger is usually not a bad thing and can be used as a means to help businesses grow (that includes failing or struggling businesses too).
This misconception stems from a misunderstanding of what a merger is – at its core, it is a transfer of ownership and control (or splitting thereof). And with this process comes a vast number of gains for the person acquiring and much transitioning for the asset being acquired. Let’s break down exactly what goes into a merger and acquisition.
Strategic Motivations, Growth, and Synergies
There are a vast number of reasons (and motivations) behind a company’s decision to acquire or merge with another unit which can include financial optimization, market expansion, or even just access to new technology. For a company that might be struggling in these areas, this is of great benefit, however, the same is true for a successful company looking to grow. Outside of boosting a brand or company’s competitive advantage, a merger can also help in the creation of synergistic value, which comes in the form of increased revenue or income. And while a merger sounds straightforward, there are a multitude of key movements that need to be made for it to be successful.
Therefore, specialized firms can be instrumental in ensuring mergers go smoothly by offering expert guidance and operational support (especially for first-timers). Additionally, these kinds of firms also ensure everything is in order where company assets and resources are concerned to maximize the benefits of an acquisition. This highlights the importance of asset acquisition and how it can impact technological advancements in a company (source: https://infinitymerge.com/).
Another pivotal part of a merger is strategic restructuring and how it can help with financial optimization further down the line. While each component plays a key role, they are all interconnected in that, for example, a bad decision with finances can significantly affect technological innovations during a merger.
Even more, this stresses the need for a crucial amount of thought and planning to be poured into a merger proposal. Ultimately, while motivations are vast, they need to align with company operations and standards.
Integrating Operations and Structures
Another key aspect of a merger and acquisition, which could also be considered a challenge, is the merging of operational systems, processes, and teams. Where operations are concerned, a restructuring without any redundancies would be required to make sure all resources are being correctly distributed.
Furthermore, the restructuring would also be important as a set of processes and procedures that may have worked for the individual businesses may not work for the merger. Therefore, it is important to take into account what the combined business offering will be and the most efficient way to execute these functions. Being aware of this information and having detailed action plans can make it that much easier to come up with new operational and structural processes.
When it comes to merging staff, it is not as simple as it may sound. This is because there may be a clash in company cultures, visions, and goals wherein one may have the complete opposite of the other. Of course, this does showcase the importance of merging with a business where these values align, but that may not always be the case.
For this to be handled well, there needs to be strategies in place to help various departments merge seamlessly. An example is to allow HR (Human Resources) departments to collaborate on how best to update policies and benefits to align with the new business models.
Furthermore, this is to make sure there is policy harmonization, which in turn, can significantly help when it comes to decision-making. Leadership may also be impacted by this shift, as previously, there was only one body of authority and now, they are combined with another group. Ensuring alignment for all of these aspects is a key priority of a merger, as it entails more than just combining operations, but also workplace socialization.
Managing Transition and Employee Concerns
While considering the importance of merging two staffing bodies as a whole, it is also of equal importance to address these changes with employees as individuals. For one, taking into consideration how the transition can be streamlined for an employee can be a good approach to take. Especially with the state of the current economy, many employees are worried about job security and salary changes, and with good reason.
Furthermore, there might be concerns surrounding contract and role changes for employees in specific functional positions that may disappear once the merger is complete. As such, providing updates throughout the process and addressing these concerns in a direct manner is a good way to provide peace of mind and increase morale.
Handing these concerns over to HR to address with each employee individually is another good way to go about it. However, the goal is to ensure there is open communication and constant reassurance throughout the merge.
While peace of mind for employees is of utmost importance, it also helps to maintain productivity during the acquisition period. Maintaining a high level of productivity throughout this time can also help with income and revenue generation. It also ensures there is a constant stream of effort being made, with results to show for the acquiring party.
